Millions of drivers could 'decline £700' as car finance compensation decision looms

This is based on a participation rate of 85 per cent, which would result in consumers receiving an average of £700 per agreement.

This stems back to the car finance scandal, which saw drivers overcharged by lenders and dealers so they could get a larger commission.

While this was banned by the FCA, it investigated the practice amid fears millions of drivers could have been unfairly charged extra between 2007 and 2024.

The FCA confirmed that it would set out its approach to the car finance redress shortly after markets close on Monday, March 30.

This follows the October 2025 consultation scheme and will be unveiled after markets close to ensure any decision does not negatively impact the industry immediately.

The regulator stated that it aimed to give the green light to compensation payments this year, with further details likely to be revealed on March 30.

Equifax has called on drivers to ensure they can receive the compensation if they are eligible for the redress scheme.

Craig Tebbutt, financial health expert at Equifax UK, said: "Most of us wouldn't dream of declining an offer of £700, but we could be doing exactly that when it comes to the FCA's redress scheme."

The FCA estimates that 14 million car finance agreements between 2007 and 2024 are potentially eligible for compensation.

However, old or missing paperwork could make it difficult to access the compensation, especially if they need the important details.

Mr Tebbutt described it as a "real barrier", while he acknowledged that it may seem like a hassle to motorists who are unsure of which details they need.

A recent survey found that 25 per cent of people do not want to "confront reality" when dealing with financial administration issues.

He added: "We're a nation of savers and there are lots of good personal finance habits out there to celebrate, but a thorough MOT of our household finances can often fall down the priority list.

"Small habits like regularly checking your credit score can help empower financial well-being and enable consumers to meet their financial goals faster."

Meanwhile, claims firms are being urged to ensure they are compliant with FCA rules or risk "operational chaos, compliance breaches, and enforcement action".

Claims management companies have just weeks to ensure they meet the FCA's "robust checks" before the compensation scheme launches amid fears they could be caught out.

Joe Morris, sales director at SmartSearch, said: "March 30 is decision day for the industry. Firms that invested in compliance early will process claims immediately.

"Those that didn't now face a stark choice: pause client onboarding to fix systems, or risk handling claims with inadequate checks - and the enforcement consequences are real. The smart money acted early; the rest are about to find out what delay costs them."